Some days things matter, sometimes things don’t. The US returned from its 4th of July celebration with the unanimous decision that US wheat was undervalued. Spare a thought for the US HRW grower who, from Feb to April the business end of the growing season, saw the HRW belt precipitation run somewhere from 25-40pc of normal rainfall. From June to today, the harvest window, Kansas is running from 100 to 190pc of normal rainfall. As per the last update Kansas was 46pc harvested vs the 10yr average of just under 60pc. Clearly the rain is having an impact on both quality and yield. 

Adding to the weather woes is the outlook for Canada. Saskatchewan is only looking at 50-60pc of normal rainfall. Additionally, Alberta is in for some serious heat with Edmonton set for near 30°C this weekend. 

Russian spring wheat conditions round off the “let’s buy today” list. Same same – hot and dry in the front end of the forecast. Since May the majority of the Russian/Kazakhstan spring wheat belt is running from 30-60pc of normal rainfall. The spring wheat crop accounts for roughly 30pc of total wheat production. 

While on Russia – the war matters when the market decides it does – today, the wires (and western press) are focused on Ukraine’s concerns around Russia sabotaging the Zaporizhzhia Nuclear Power Plant. At the same time, Russia indicated it has not made a final decision on whether to extend the Black Sea corridor. Rinse repeat – similar rhetoric to last time – approvals expire on 17 July. The Financial Times reported on Monday the European Union was considering a proposal for the Russian Agricultural Bank (Rosselkhozbank) to set up a subsidiary to reconnect to the global financial network, as an incentive for Moscow to extend the deal. Russian Foreign Ministry spokeswoman Maria Zakharova rejected that idea on Tuesday, saying there was no substitute for restoring Rosselkhozbank’s full access to SWIFT. 

The long-awaited China recovery is seemingly not coming anytime soon. Investment bank Goldman Sachs downgraded its rating of three of China’s top banks on Wednesday, indicating the weakening economy has forced them to move to a sell recommendation.

Australia

The dichotomy between the El Niño outlook and the wet conditions is not lost on both the trade and producer in Australia. Activity is sporadic with our local markets only occasionally following global futures markets. With the tightness of the US wheat balance sheet and the challenges the US is having getting its crop into the bin it makes sense that US futures market is more inward-looking than normal. The Aussie trade is, by our calculations, carrying an extremely low exposure to these traditional hedge markets. As a result, price transparency is derived by CNF interest, which is not a daily event. Additionally, A$ moves are meaningful, so with the CNF market waiting for cheaper offers that more closely align with Russian FOB values and an amazingly boring Australian currency the Aussie trader has little incentive to grind the axe. 

Canola has been a roller coaster. New crop values in the west have traded a $40/t range this week, and it’s only just Thursday. Meanwhile the east is dragging its heels. The west vs east spread has been extremely volatile over the last few years. Currently the west (FIS) vs the east is around a $75/t premium with the longer term average closer to $20/t. The last few years have skewed the historical range with the trade battling port access and competing elevation. 

Local feed markets were also searching for definition as growers battled softening prices, a new financial year and cash flow requirements. New crop red wheat was quoted at $365-370/t delivered Geelong/Melbourne while delivered Darling Downs wheat would be circa $410-415/t.